Driven by ultra-low interest rates, the average loan for buying existing homes has reached 500,000 yuan, raising concerns that many people are carrying more debt. Australian Bureau of Statistics data shows that the average loan for existing homes in NSW in 2019 increased by 112,600 yuan (22.2%) to an all-time high of 621,500 yuan. In Victoria, average loans increased by 64,800 yuan to 517,900 yuan, and Queensland increased by 15% to 419,800 yuan. Most of the growth came from the middle of the year, when the RBA began to lower interest rates to a record low of 0.75%.
The increase in loans in each state and territory is higher than the increase in wages. Craig James, chief economist at Federal Securities, said that despite the country’s average loan amount above $ 500,000, it is difficult to continue to grow rapidly. He said that if mortgages continue to rise, RBA will start to worry. “The president of the RBA said that if the loan is a little too crazy and irrational, there will be an assessment,” he said.
Speaking to a parliamentary committee hearing last week, RBA president Philip Lowe said that if people continued to borrow to buy a house while already carrying higher debts, it would cause problems for the overall economy. The total number of mortgage approvals increased by 4.4% in December and 14% last year. Starting from the recent lows in May, new loans have increased by 20.7%.
